The UK is set to gain its first power station that uses a novel gasification technology to convert discarded wood into electricity, following a £47.8m investment from a group including the government-backed green investment bank (GIB).

The Birmingham Bio Power plant will convert recovered wood into electricity through a gasification process in which carbon in wood is converted into gas, which is then used to raise steam to drive a turbine.

The 10.3MW project is being developed by Carbonarius, a joint venture between Stoke-on-Trent technology developer O-Gen and property firm The Una Group. It is aiming for completion in 2016, in time to secure payments from the Renewable Obligation Certificate subsidy regime.

The GIB also invested a further £6.2m indirectly through its backing of the Foresight Group's UK Waste Resources and Energy Investments fund.

Business Secretary Vince Cable welcomed the deal, which is expected to create more than 100 jobs and boost the local supply chain. Global firm MWH Treatment has won the contract to design, build and maintain the plant, while Nexterra Systems will provide the gasification system.

"It is encouraging to see this innovative new technology coming to the UK for the first time," said Cable in a statement. "This investment will create green jobs and help the environment by reducing carbon emissions and converting wood diverted from landfill into cleaner energy for thousands of homes and businesses. It is also good news for the local area, helping to build a stronger economy by creating over 100 private-sector jobs in Birmingham."

The GIB said the plant would avoid 2.1 million tonnes of CO2 equivalent from being released into the atmosphere over its 20-year lifetime and save around 1.3 million tonnes of wood from landfill.